Author of three books. This blog not very active so follow on Twitter: @gary_weiss

Tuesday, February 16, 2010

'Naked Shorting' Scam Artist Indicted Again

About a year ago I described how one of the leading troubadours of the naked shorting conspiracy theorists, Joshua Lankford (left), had gone on the lam after a federal court indictment.

Lankford ran an Internet webcasting outfit called MN1.com, which had served as a sounding board for the likes of Patrick Byrne, the wacky, book-cooking CEO of Overstock.com, and Richard Altomare, the sticky-fingered chieftain of Universal Express.

A reader brings to my attention this press release from the FBI in Oklahoma City, announcing that Lankford and four other defendants were indicted in a $41 million pump and dump scheme. Lankford is still a fugitive, according to the FBI.

Late in 2006, while Lankford was running his schemes, Byrne sent his loyal acolytes to the crook-run MN1.com. He fed naive boobs to its pump-and-dump schemes by offering a "Club O membership worth $29" to listeners. All references to his support of the MN1 scam have been nuked from the Internet, but a mention of it can be found here.

Well, almost all references. After this item appeared, a sharp-eyed reader broad to my attention this Overstock press release extolling the virtues of MN1.com, with language cut-and-pasted from Lankford:

Market News First is an online, market news provider that brings investors current news on the market. Market News First is the only online, live radio web site that brings real market news to investors and features live interaction with companies from the Bulletin Board to NYSE.

Through daily, live interviews, we bring you up to date on all the established companies and inform the investors of the newest opportunities within the market. Market News First offers one-on-one interviews with the presidents and CFOs of companies to deliver answers to the questions that investors may ask and provides them insight into the companies’ present condition and future plans.

Seth Jayson at Motley Fool reviewed the MN1-Byrne relationship in this post in late 2007. Most of the links to which he refers, such as one from the Overstock community board in which Byrne praises MN1, have since been excised.

Byrne is enmeshed in criminal schemes of his own--sponsoring an Internet pretexting enterprise that stalked the spouses and kids of his critics. There is also a renewed SEC investigation into his own peculiar brand of "accounting," which created a "cookie jar reserve" allowing Byrne to manipulate his financials. And let's not forget that sales tax avoidance scheme he concocted during his failed attempt to bust into the diamond market a few years ago.

Byrne reported his 2008 results on Jan. 30, 2009, but reports that he would puke forth his latest set of phony numbers yesterday proved inaccurate. I guess he's still going back and forth with his latest auditors--he's on his third set of auditors in as many years--no doubt concerning how much phoniness is acceptable.

When Zero Mostel cooked the books in The Producers it was funny, but this long-running comedy is wearing thin. He really belongs in jail. Question is, will he go on the lam as Lankford has done?

Byrne, meanwhile, has yet to apologize for giving aid and comfort to the fugitive stock swindler Lankford. Of course, I imagine Byrne probably doesn't think the guy did anything wrong. Besides, what's that old saying, "Narcissism means never having to say you're sorry"?

UPDATE: One Byrne fan writes in to point out that it's not fair to tar Byrne with his association with Lankford, just on the strength of one appearance. Did I do that? Gee, I'm sorry. I should have pointed out that he appeared on MN1.com at least twice, and sent out an email (replicated here) to Overstock.com customers extolling Lankford's operation as "a kind of online CNBC."

Yet Byrne either knew or should have known that MN1.com was sleazy, as indicated by this follow-up post on its role as a stock promoter, and this one pointing out that it was an "analyst for hire shop."

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About Me

I'm a journalist and author. My latest book is AYN RAND NATION: The Hidden Struggle for America's Soul (St. Martin's Press: Feb. 28, 2012). My previous books were Wall Street Versus America (Portfolio: 2006) and Born to Steal (Warner Books: 2003). I was an investigative reporter and Wall Street writer for BusinessWeek, a contributing editor at Condé Nast Portfolio, and have written for the Daily Beast, Parade magazine, Salon, The Street.com, Fortune.com, Barron's and many other publications. I was an adjunct professor at Columbia University's School of Journalism. Follow me on Twitter @gary_weiss Email: garyweiss dot email at gmail dot com